Page 69 - bne IntelliNews Russia OUTLOOK 2025

Cuts to social spending
MinFin plans to issue RUB4 trillion of domestic OFZ bonds to finance the military expansion, but will also cut nominal spending on social welfare, which includes pensions and benefits. The budget for this category will decrease by 16%, from RUB7.731 trillion in 2024 to RUB6.492 trillion in 2025. While social expenditures are expected to rise slightly in 2026 and 2027, they will remain below 2023 levels.
Other sectors face cuts or stagnation. Healthcare spending will increase modestly from RUB1.62 trillion to RUB1.864 trillion, but several critical initiatives will see sharp reductions. Funding for cancer treatment will drop by 5.1%, cardiovascular disease programmes by nearly 50% and health infrastructure projects by a third. Education spending will remain virtually unchanged at RUB1.577 trillion.
Conversely, funding for state propaganda media will rise to a record RUB137.2bn, up 13% from 2024.
Focus shifts to boosting military spending from cuts.
Russia's 2025 state budget and the 2026-2027 budget plan anticipate budget expenses to increase in 2025, according to the revised plan, where rather than cutting military spending, it will be raised strongly to new record highs, whereas the previous plan contained large cuts to military spending. According to this draft, military expenses would comprise 6.2% of GDP in 2025 and decline to 5.6% in 2026.
The MinFin seems to have radically rethought its strategy. Previously it was trying to contain spending to keep the pressure off the budget, but now it seems to believe that actually heavy spending will fuel growth
69 Russia OUTLOOK 2025 www.intellinews.com